Manna Manufacturing purchased a machine on January 1, 2015, for $42,750. At the

Question

Manna Manufacturing purchased a machine on January 1, 2015, for $42,750. At the time of purchase, the machine was estimated to have a life of four years and a residual value of $7,750. On January 1 2017, Manna determined that the machine had a total useful life of seven years (another five years left) and a residual value of $4,500. If Manna uses the straight-line method of depreciation, what will be the depreciation expense for the machine in 2017? Select one: a. $4,150 b. $2,600 c. $6,800 d. $5,900

Explanation / Answer

Answer

a ) 4150

depreciation per year = 42750 - 7750 / 4

= 8750

book value of machine as on jan 1 2017 = 42750 - 8750 * 2

= 42750 - 17500

= 25250

Revised depreciation = (Book Value on the date of Revision - Salvage Value) / Remaining

Useful life after revision

= (25,250 - 4,500) / 5

= $20,750 / 5

= 4150

Related Questions

Navigate

• Browse (All)
• Browse M
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.